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Special Report

Canada Office National Report

2Q 2023

Excess Supply Delays Sector Recovery;
Interest Rate Hikes Rekindle Uncertainty for Investors

Office sector to face challenges, despite resilient economy. Canada’s total employment showed strong momentum over the first five months of 2023, as over 230,000 jobs were created, which maintained the unemployment rate near 5 per cent. This strength in the labour market was accompanied by better-then-expected GDP growth in the first quarter, which reflected an economy that was resilient to elevated interest rates. Despite the strong job gains, fundamentals in the office sector continued on a softening path. On a year-over-year basis, the national vacancy rate rose to 13 per cent in March, with the average asking rent falling below $18 per square foot for the first time since the fourth quarter of 2021. For the remainder of 2023, an anticipated slowdown in economic activity and a surge in supply will likely weaken these metrics further.

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